Status and the Demand for Visible Goods: Experimental Evidence on Conspicuous Consumption

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Abstract

Some economists argue that consumption of publicly visible goods is driven by social status. Making a causal inference about this claim is difficult with observational data. We conduct an experiment in which we vary both whether a
purchase of a physical product is publicly visible or kept private and whether the income used for purchase is linked to social status or randomly assigned. Making consumption choices visible leads to a large increase in demand when income is
linked to status, but not otherwise. We investigate the characteristics that mediate this effect and estimate its impact on welfare.

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